New Hungarian natural gas wholesale licence expected in weeks
Hungary's national development ministry is expected to issue a decree in the coming weeks which will permit companies not based in the country or without domestic end-users there to trade wholesale natural gas. The ability to trade without a physical presence in Hungary is expected to increase interest at the virtual hub.
Energy regulator MEH on Tuesday confirmed to ICIS the ministry had positively responded to it about the proposed new licence last week. The watchdog added that the ministry indicated an official decree on the matter would be issued in around three weeks.
ICIS understands that under the terms of the new licence being developed a shipper will be limited to the wholesale market only, and will not be permitted to sell gas to end -sers.
The inability of foreign companies to trade on the wholesale market - unless they have an office in the country or an end-user supply base - has been seen as a key reason for the lack of trade on the virtual Hungarian MGP hub. A sluggish start to the trade at the new local gas exchange, CEEGEX, has also been blamed on the lack of a licence for companies without a presence in the country only two trades have been transacted since it started in January.
CEEGEX began pushing for the limited licence option even before the bourse went live. The exchange previously said once the new licence is available more trade will happen on its platform (see ESGM 25 May 2012).
After launching on 2 January, CEEGEX has still only two registered participants: Paris-headquartered GDF SUEZ and MVM, the local state-run power incumbent, which is in the process of taking over E.ON's gas assets (see ESGM 1 February 2013). In that time just two trades have been transacted.
The first trade took place on 15 January for Day-ahead delivery at forint 8,449/MWh (equivalent to €28.48/MWh on the exchange rate of that day) for a total of 10MW.
The deal was around €1.00/MWh higher than equivalent over-the-counter (OTC) contracts traded at other nearby European markets on the same day and assessed by ICIS. At the Austrian VTP, the Day-ahead closed at €27.40/MWh, while the Czech spot finished at €27.475/MWh.
The second Hungarian Day-ahead trade occurred on the following day at an equivalent price of €28.67/MWh, for the same quantity. While the exchange-traded MGP spot had gained around €0.19/MWh day on day, its equivalent in Austria gained just €0.05/MWh. Day-ahead in the Czech Republic was up by €0.325/MWh, however.
With no clear neighbouring hub providing the MGP with direction - and with only two deals transacted - it remains too early to ascertain key Hungarian fundamentals. But with the new type of licence soon to be available there is some optimism from market observers.
"This kind of project takes time. The exchange needs to attract some big players in order to develop liquidity. Besides, traders also have to test if the system is working properly," one Hungarian power trader told ICIS.
The fact that CEEGEX is owned by the operator of the local electricity bourse, HUPX, could also boost confidence in the platform.
"It took some time for the electricity exchange [to gain momentum], but I think that now that HUPX [as a brand] is popular among traders this will help the gas exchange develop quicker," the trader added.
According to MEH data, Hungary has 44 registered gas traders, the majority of which are locally based. The new limited gas traders' licence is likely to boost interest in the OTC market, as well as interest at the bourse.
The national development ministry did not respond to requests for comment on the anticipated decree on Wednesday.
Tom Marzec-Manser and Nicole Tovistiga
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